What are the consequences of Bankruptcy?

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What assets can you keep in Bankruptcy?

Important Note: The amounts mentioned in this FAQ are valid as at 27 October, 2021.

Amounts provided in this FAQ should only be taken as a general guide.

Many Bankruptcy-related monetary thresholds are indexed/subject to change over time.

Work-Related Tools/Equipment

Assets required to perform your trade or profession can be kept up to their current market value (if they were sold today) of $3,800.


A vehicle or vehicles (including motorbikes) you own and mainly use for transport up to the value of $8,150 are also allowed to remain with you.

If you haven’t paid off the vehicle, the amount that counts towards the limit is its value minus what you still owe.


Your Trustee in Bankruptcy can take any cash or money you have in a bank account at the date of bankruptcy, but will leave you with enough for modest living expenses.

Personal Property

Other items of property you may own that you can keep in bankruptcy include:

✅ Household goods – appliances, furniture, clothing

✅ Superannuation funds (unless you’ve made contributions prior to bankruptcy to defeat creditors)

✅ Assets you hold on trust for someone else

✅ Awards with sentimental value up to certain limits and creditor approval (e.g. sports trophies)

✅ Personal injury claims and compensation

✅ Life insurance policies

Your Home

If you are able to make the necessary arrangements, you may be able to co-ordinate a co-owner, family member or friend to purchase your interest in your home from the Trustee in Bankruptcy so that you can continue to live in your house.

Your Income (if any) during Bankruptcy

The legislation currently allows you to keep every after-tax dollar of your income up to $60,515 (if you have no dependants). This threshold increases if you have dependants.

For after-tax income above your relevant threshold, you will need to pay the Trustee in Bankruptcy 50c per after-tax dollar you earn.

Which debts are not covered by bankruptcy?

It is important to be aware that the following debts are not automatically extinguished by your Bankruptcy:

❌ Fines ordered by a Court (including traffic + parking offences);

❌ Child Support debts;

❌ HELP + HECS debts (Student Loans);

❌ Debts incurred after your Bankruptcy commences; and

❌ Debts incurred by fraud.

Your Statement of Affairs (SOA)

All Bankrupt Persons must complete a Statement of Affairs (SOA) + submit it to their Trustee in Bankruptcy.

Failure to do so in a timely manner can extend the length of time you remain Bankrupt.

When you do provide your SOA, you need to do you best to ensure it is complete as It is a serious offence to fail to provide full disclosure of all of your assets + liabilities.

Undisclosed assets or debts are highly likely to be uncovered during the investigations carried out by your Trustee in Bankruptcy.

If you omit something by accident, it is extremely important to let your Trustee in Bankruptcy know as soon as possible.

Further reading: The Consequences of Bankruptcy


This FAQ was created by James D. Ford GAICD | Principal Solicitor, Blue Ocean Law Group℠.

Important Notice:

This FAQ is intended for general interest + information only.

It is not legal advice, nor should it be relied upon or used as such.

We recommend you always consult a lawyer for legal advice specifically tailored to your needs & circumstances.